Risk Sentiment Subdued Amid Lackluster Commodity Prices

(RTTNews) - The major U.S. index futures are pointing to a higher opening on Monday,  with sentiment still unsettled despite the strong lead from across the Atlantic. European stocks are rallying strongly, as pent up demand is manifesting in the wake of recent weakness, piggy-backing on strong German factory orders and eurozone investor sentiment data. Earlier in the global trading day, the Asian markets ended mixed despite weak Chinese trade data.

With oil strength seen in the Asian session relenting and commodities extending the weakness, risk appetite is still muted. The dollar is firmer, propelled by the recent rate hike chatter. The domestic markets could track the move in the commodity markets and any rate clues, given the absence of any major domestic catalysts.   U.S. stocks retreated yet again in the week ended May 6th, as mostly disappointing domestic data, volatility in commodity prices and mixed earnings led to a lower close for the week.    Last Monday, the major averages rebounded moderately, helped by bargain hunting despite data remaining lukewarm. Mixed domestic earnings, weak overseas bank earnings and a retreat by commodities weighed on the averages on Tuesday, sending stocks notably lower.    Weak overseas data, mixed domestic earnings and soft U.S. private payrolls numbers led to a moderately lower close on Wall Street on Wednesday. Volatile commodities and nervousness ahead of the non-farm payrolls report led to a roughly flat close on Thursday. Notwithstanding the lackluster monthly jobs data, U.S. stocks recovered from early weakness and ended Friday's session moderately higher. 

For the week ended May 6th, the Dow Industrials lost 33.01 points or 0.19 percent to 17,741, while the S&P 500 Index ended down 8.16 points or 0.40 percent at 2,057 and the Nasdaq Composite closed at 4,736, down 39.20 points or 0.82 percent. 

Among the sectors, the Philadelphia Oil Service Index and the NYSE Arca Biotechnology Index fell 6.30 percent and 5.06 percent, respectively for the week. The NYSE Arca Oil & Gas Index and the NYSE Arca Computer Hardware Index slid over 4 percent each. Additionally, the NYSE Arca Airline Index, the NYSE Arca Gold Bugs Index, the NYSE Arca Broker/Dealer Index and the KBW Bank Index all ended down over 3 percent.    Currency, Commodity Markets   Crude oil futures are easing $0.06 to $44.60 a barrel after finishing the week ended May 6th down $1.26 or 2.74 percent at $44.66 a barrel. With the loss, oil snapped a 4-week winning streak. Lackluster data exerted downward pressure on oil last week despite a production disruption due to the forest fire that raged in Alberta, Canada.    Gold futures, which gained $3.50 or 0.27 percent to $1,294 an ounce in the previous week, are currently slipping $20.50 to $1,273.50 an ounce. The weak jobs data released last week lent support to the precious metal.    Among currencies, the dollar advanced in the week ended May 6th, with the buck rising 0.76 percent against the yen before ending the week ended May 6th at 107.12. The dollar also added 0.34 percent against the euro to $1.1404 a euro but not before rising to an 8-month high of 1.1616 mid-week. Fed rhetoric that kept interest rate hike hopes alive despite lackluster domestic data offered support to the dollar last week.    The U.S. dollar is currently trading at 108.26 yen and is valued at $1.1403 versus the euro. 

Asia    The major Asian markets closed mixed, with the Chinese, Indonesian, Malaysian, South Korean, Taiwanese and New Zealand markets retreating, while the rest of the major markets advanced. Weak Chinese trade data and volatility in commodity prices impacted the mood of the markets.   The Japanese market advanced as the yen weakened. The Nikkei 225 Index opened higher and hovered above the unchanged line in a broad range before ending up 109.31 points or 0.68 percent at 16,216.    Most sectors advanced, led by export stocks. However, the chemical and resource spaces were mixed, and insurance, marine transportation, telecom and electric utility stocks saw weakness.    Australia's All Ordinaries Index saw volatility throughout the session but recovered in late trading, ending up 29.20 points or 0.54 percent at 5,388. Consumer, energy and financial stocks were among the best performers of the session, but material stocks came under selling pressure.    Hong Kong's Hang Seng Index ended at 20,157, up 46.94 points or 0.23 percent, while China's Shanghai Composite plunged 81.14 points or 2.79 percent before ending at 2,832.    On the economic front, a report released by the Chinese General Administration of Customs showed that exports from China fell 1.8 percent year-over-year in April, confounding expectations for a flat reading. Imports plunged 10.9 percent, bigger than the 4 percent drop expected by economists. Accordingly, the trade surplus came in at $46.56 billion, ahead of the $40 billion surplus expected by economists.    Confidence among Japanese consumers weakened slightly less than expected in April after improving in the previous month, data from the Cabinet Office showed. The seasonally adjusted consumer confidence index fell to 40.8 in April from 41.7 in March. Economists had expected the index to fall to 40.7.    Europe   European stocks opened higher but reversed course immediately afterward. After stopping short of a dip into the red in late morning trading, the indexes climbed yet again and are notably higher. Bargain hunting following 2 weeks of lackluster showings has helped the markets, aided by strong German factory orders data and the rally in oil prices.    In major corporate news, Total announced an agreement to buy battery maker Saft for 950 million euros.    On the economic front, data released by the Federal Statistical Office showed that factory orders in Germany rose at the fastest rate in 9 months in March, with foreign orders providing a shot in the arm. Orders jumped 1.9 percent month-over-month, reversing the 0.8 percent decline in February. Economists expected a 0.7 percent increase.    A survey by Sentix showed that investor confidence in the eurozone rose to a 4-month high in May. The Sentix index rose 0.5 points to 6.2 in May.     Data released by mortgage lender Halifax showed that U.K. house prices slipped 0.8 percent month-over-month in April following a 2.2 percent increase in March. Economists expected a 0.3 percent drop.

U.S. Economic Reports   Several Fed speeches are strewn across the unfolding week, leaving traders on tenterhooks over what the central bankers have to say on the trajectory of the Fed funds rates. The Commerce Department's retail sales report for April, the weekly jobless claims report, the Labor Department's report on producer prices for April and the results of the University of Michigan's preliminary consumer confidence survey for May are among the closely watched reports of the week.    The Commerce Department's wholesale and business inventories reports for March, the Labor Department's report on import and export prices for April, the Treasury's monthly budgetary statement for April and the results of the Treasury Department's auctions of 3-year and 10-year notes and 30-year bonds round up the economic events of the week.    At 1 pm ET, Minneapolis Federal Reserve Bank President Neel Kashkari will give a speech to the Economic Club of Minnesota followed by media availability.  

Stocks in Focus 

Krispy Kreme Doughnuts (KKD) has agreed to be acquired by JAB Beech Inc. in a deal valued at about $1.35 billion. JAB Beech is an indirect controlled subsidiary of JAB Holding Co., in which BDT Capital Partners is a minority investor alongside JAB. 

Tyson Foods (TSN) reported better than expected second quarter results and the company raised its outlook for 2016.

Teva Pharma (TEVA) reported above-consensus results and it guided second quarter earnings in line.   Apollo Education (APOL) announced that its shareholders have approved the company's acquisition by a consortium of lenders, including the Vistria Group, for $10 per share in cash.    Hertz Global (HTZ), Lattice Semiconductor (LSCC) and Liberty Global (LBTYA) are among the companies due to release their quarterly results after the close of trading.